Over the weekend, we spoke about using road pricing as a way to correct supply and demand imbalances on city roads and highways. Because it turns out that when roads, or anything else for that matter, are free, people tend to use them a lot more. It's why when you suddenly submeter utilities in an apartment building, consumption tends to drop off significantly. Now it's no longer "free".

It's for this exact reason that Venice -- a city that has been complaining about too many tourists for many years -- has decided to implement a new entrance fee. Starting spring 2024, day trippers will have to pay €5 to enter the "old city" of Venice.

If you own a home there, you're exempt because presumably you're already paying property taxes. And if you're staying overnight, you're also exempt, because presumably you're going to be paying whatever hotel taxes the city levies. But if you're just coming in for the day, you're going to need to pay.

Now, I don't know if €5, structured in this way, is going to fully address the city's overtourism concerns. Maybe it needs to be a lot more. But it is a step in the right direction. If you have too much demand for a certain amount of supply, you can generally lower demand by increasing the price. Perhaps the only exception is a Birkin bag. Apparently you can charge any price for these.

Photo by Martin Katler on Unsplash